Disaster risk is increasing with every passing day. Poverty, rapid urbanization, climate change -- these and other factors are leaving people and communities ever more exposed.
Governments bear the primary responsibility for disaster risk reduction.
But the level of risk is also related to the where and how of investment by the private sector, which is responsible for 70 to 85 per cent of worldwide investment in new buildings, industry and critical infrastructure.
In the years ahead, trillions of dollars will be invested in hazard-exposed regions. If that money fails to account for natural hazards and vulnerabilities, risk will increase. Where such spending does address underlying risk factors, risk will go down.
Our challenge is to be on the right side of that ledger -- the smart side, the prevention side.
The Global Assessment Report on Disaster Risk Reduction being released today aims to help us meet that challenge. We all know the human case for disaster risk reduction -- the lives we can save with modest up-front attention. This report makes a powerful business case for disaster risk reduction.
The report presents a clear picture of past and future expected disaster losses.
We have carried out a review of disaster losses in 56 countries. Our startling finding is that direct losses from floods, earthquakes and drought have been underestimated by at least 50 per cent. So far this century, direct losses from disasters are in the range of $2.5 trillion. This is unacceptable when we have the knowledge to reduce the losses and benefit from the gains.
Looking to the future, the report estimates that average losses from earthquakes and wind damage from cyclones will be $189 billion dollars per year.
Let us not shy away from the meaning of these numbers: Economic losses from disasters are out of control. They can only be reduced in partnership with the private sector, including investment banks and insurance companies. For too long, markets have placed greater value on short-term returns than on sustainability and resilience. At long last, we are coming to understand that reducing exposure to disaster risk is not a cost but an opportunity to make that investment more attractive in the long-term.
From the Fukushima disaster in Japan to flooding in Thailand and Hurricane Sandy here in New York, the world has seen how disasters damage infrastructure and interrupt output.
Business can no longer afford a ‘blind spot’ to disaster risk, which is largely ignored in economic forecasts and growth projections.
In most economies, the majority of people depend in some way on the private sector for income. Business must become more risk-sensitive.
The unprecedented growth of urban areas presents new opportunities for resilient investment. In India alone, the urban population is expected to reach 875 million in 2050, more than double current levels. Imagine the long-term benefits, both social and economic, if these investments are resilient to natural hazards, and secure for generations to come.
Tourism in Small Island Developing States is another area of significant potential benefit. SIDS are highly exposed to cyclones and other hazards. Their economies are largely dependent on tourism. Investing in risk reduction protects investments and secures development gains. A resilient and safe tourism sector not only benefits the communities involved, but can also attract visitors -- which in turn strengthens the sector.
The launch of this report comes as we accelerate our work for the Millennium Development Goals and as we engage in a crucially important global effort to define an ambitious post-2015 development agenda. Reducing disaster risk can increase our chances of building the sustainable and equitable future we want.
The Global Platform for Disaster Risk Reduction, to be held next week in Geneva, is an important opportunity to advance these efforts, and to consider the role of the private sector in the successor to the Hyogo Framework of Action as well as the contributions that business can make in general.
Today, I commend this report to leaders in the public and private sectors as well as civil society in the hopes that it will inspire a redoubling of our collective efforts to build and sustain resilient communities and nations.